Hotels, funiculars, local railways and Italian credit

The tourist economy of the Belle Époque

The opening of the Gotthard line in 1882 gave Lugano and Locarno access to the travellers of northern Europe. Between 1890 and 1914 the two lake towns experienced their Belle Époque: grand hotels on the waterfront, villas for foreign residents, parks, casinos and promenades.¹ The tourist economy required large investments in buildings and infrastructure whose returns depended on a few months of the season and on the prosperity of distant markets. Hotel companies were typically financed by a combination of share capital from local notables and foreign investors, mortgage loans from local banks and bonds placed with the public. Chapter C.III describes how the railway transformed the economy of Lugano, while the present section concentrates on the financing of the ventures that followed it.

The financial structure of the hotel trade made it vulnerable to any interruption of demand. A hotel company with a mortgage and a bond issue needed a full season every year to pay interest. When the First World War closed the borders in August 1914, the foreign guests disappeared and many hotel companies across Switzerland became insolvent. The Federal Council responded with wartime amendments to the Debt Enforcement and Bankruptcy Act, which slowed or suspended enforcement and allowed distressed debtors, among them many hotel companies, to obtain moratoria on their debts. The Federal Court nevertheless held in March 1917 that a hotel company which was already over-indebted could not shelter behind the wartime moratorium rules, because the substantive duty of an insolvent company to file for bankruptcy remained in force in the public interest.² The case concerned the Hotel Giessbach on Lake Brienz, but the same structural problem affected the hotels of Lugano and Locarno, whose lenders included the Ticinese banks.

Funiculars and mountain railways

The tourist boom produced a series of mountain railways and funiculars around Lake Lugano. The funicular to Monte San Salvatore opened on 27 March 1890 after a concession procedure that began with an application by the Lugano lawyer Antonio Battaglini in August 1885 and an approval by the Federal Assembly in December of the same year. Its construction was rescued by the BSI when the contractors ran into financial difficulties.³ The funicular to Monte Brè, built under a federal concession of 1905, opened in two stages: the lower section from Cassarate to Suvigliana on 10 June 1908 and the upper section to the summit on 17 February 1912. The line opened the eastern slopes of Lugano to residential and tourist development.⁴ The rack railway to Monte Generoso, opened on 5 June 1890, climbed from Capolago in the Mendrisiotto towards the summit and served the hotel that the physician Carlo Pasta had built on the mountain in 1867.⁵

These ventures shared a pattern. A promoter obtained a federal concession, which was required for every railway under the Federal Railway Act. The promoter then sold the concession to a company or to a contractor who raised capital from local and foreign investors. The bank of the promoter's town supplied short-term credit during construction and placed the shares or bonds with its clients. When construction costs exceeded the estimate, as they almost always did, the bank had to choose between losing its credit and providing more money. The ventures created value for the town as a whole, since they raised land prices and attracted visitors, but their own returns were often meagre.

Notes

1. Christian Tresoldi, "Lugano, città della Belle Époque", tio.ch, 17 February 2026, https://www.tio.ch/rubriche/ospite/1905104/lugano-citta-epoque-belle-tresoldi-christian ("con un picco tra il 1890 e il 1914"). ↩
2. Federal Court, judgment of 16 March 1917, Grillet c. A.-G. Hotel Giessbach, BGE 43 III 109, summary at https://app.omnilex.ai/it/sources/court-decision/ch-bge--43-iii-109/bge-43-iii-109. The judgment refers to the "Kriegsnovelle z. SchKG" enacted by the Federal Council for the duration of the war and holds that these rules "ändern bloss das Vollstreckungsverfahren, nicht aber die materiellrechtliche Pflicht" to declare bankruptcy. ↩
3. Funicolare Monte San Salvatore SA, Storia (as above). ↩
4. RSI, "Monte Brè, la funicolare che trasformò Lugano", 17 February 2026, https://www.rsi.ch/cultura/storia/Monte-Br%C3%A8-la-funicolare-che-trasform%C3%B2-Lugano--3502384.html. ↩
5. "Monte Generoso railway", Wikipedia, https://en.wikipedia.org/wiki/Monte_Generoso_railway, used as a last resort ("The line opened on the June 5, 1890"; hotel built by Carlo Pasta in 1867). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.